Email this article to a friend

Barclays said Friday said it is raising £7.3bn (€9.3bn) from Middle Eastern investors and that pretax profit in the third quarter was slightly ahead of 2007.

The UK bank, which earlier in October opted out of a government-backed financing and capital increase, said it will raise £3bn in reserve capital instruments as well as £4.3bn in mandatory convertible notes.

The capital increase, which will boost its ratio of capital held against risky assets, is somewhat higher than the £6.5bn that had been flagged in mid-October. The tier 1 ratio will go up to 11.3% from 9.1% while the core tier 1 ratio, which comprises only equity, will rise to 7.6% from previously 6.3%.

The investors that will inject capital into Barclays are Qatar Holding, Challenger, the Qatar government holding company, and Sheikh Mansour Bin Zayed Al Nahyan as well as a placement with other institutional investors.

The capital increase is subject to shareholder approval.

Barclays said income growth in the third quarter was strong, with costs growing at about the same rate. Impairment charges grew at the same rate as in the first half.

Meanwhile, it made a preliminary estimate of the net benefits arising from the acquisition of Lehman Brothers Holdings North American investment banking and capital markets businesses, and net losses from write downs of £129m. This comprised write downs of £1.2bn offset by £1.1bn in gains on fair valuation of debt. It noted that due to credit spreads narrowing substantially in October, the fair valuation on debt reversed by £1bn.

At 0819 GMT, Barclays shares traded up 12.5 pence, or 6.1%, at 217.7 pence while the FTSE 100 index traded down 1.1%.